Regulatory Series on Cryptocurrencies: US and European Approaches of Cryptocurrency Regulations

Mr. Harold Ford Jr. a former United States (US) democratic congressman, appears to be disagreeing of the US crypto regulation framework. He raises a caution and cause of concern on the U.S. Securities and Exchange Commission (SEC’s) cryptocurrencies regulations and the adverse effects on the economy.

He further expressed apprehensions over the prevailing US crypto regulatory framework and its inadequacy that could be non-conducive for the cryptocurrencies prospects. He also emphasized the flaws/loopholes of regulatory frameworks despite the umpteen number of prevailing federal agencies such as the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Internal Revenue Service (IRS), and Financial Crimes Enforcement Network (FinCEN).

Hester Peirce, SEC Commissioner, recently highlighted arguing “that the U.S. will fall behind other countries in attracting crypto-related businesses unless we are more forward-leaning in establishing a regulatory regime with discernible parameters.”

In addition, recently, President Trump’s intentions of pressurizing the Federal Reserve for dragging its feet on interest rate cuts might be persisted. Quite a few analysts reckon such an aggressive policy that is yet another inadvertent advertisement for Bitcoin for the US president.

While the debate about whether President Trump could decide to unilaterally intervene to correct what he regards as an unfairly strong dollar, or more accurately to strengthen what he perceives to be unfairly cheap foreign currencies, has intensified in recent weeks.

President Trump stated that he would like to see the Federal Reserve cut interest rates soon. He argues that if the economy takes a downturn in the future then it will be more costly to take action then, rather than pre-emptively.

He tweeted stating that “it is far more costly for the Federal Reserve to cut deeper if the economy actually does, in the future, turn down! Very inexpensive, in fact productive, to move now. The Fed raised & tightened far too much & too fast. In other words, they missed it (Big!). Don’t miss it again”!

In the 21st century, the Cryptocurrency has been the center of attraction among the wide ranges of the asset class. Cryptocurrency which is driven by the robust technology called ‘bockchain’, is growing its popularity in different industries and making its traction everywhere right, left, north, south, and center, be it derivatives, or commodity-driven or currency-pegged or bonds, including cryptocurrency ETFs, futures, CFDs, and cryptocurrency options etc) have been under the meticulous scanner of the renowned global regulators, such as, US SEC, CFTC and UK’s Financial Conduct Authority (FCA). 

One hand, various crypto-firms are obtaining licence also from CFTC for bitcoin futures trading mechanism, like, Bakkt, LedgerX and ErisX, on the other hand, the probing pertaining to the cryptocurrency scams have been growing constantly from the recent past. With regarding to this fact, the UK’s Financial Conduct Authority has been designated as an enforcer of the newly published Economic Crime Plan.

While Christine Lagarde, the presidential candidate of ECB and the chairman of IMF has contemplated the regulations to be open and conducive for distributed ledger technology.

She, at the Economic and Monetary Affairs Committee, emphasized the need for the legislatures and central bankers to strike the balance between risks and the opportunities of cryptocurrency avenues.